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Social sustainability in the fast fashion upstream
supply chain:
Uncovering the antecedents of the management of sub-suppliers
in the European fast fashion industry
By
Isabelle Smits
S2191806
Master’s Thesis IB&M
Words: 15085
University of Groningen
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Abstract
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Table of Contents
Introduction ... 4
Literature review ... 6
Social sustainability in fast fashion supply chains ... 6
Buyer’s approaches for managing the social sustainability of sub-suppliers ... 8
Methodology ... 13 Research Design ... 14 Case selection ... 14 Data collection ... 17 Data analysis ... 18 Case studies ... 18 Case setting ... 18 Retailer A ... 21 Retailer B ... 25 Retailer C ... 28 Cross-case analysis ... 31 Discussion ... 36 Conclusion ... 41
Limitations and future research ... 41
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Introduction
Fast fashion retailers can be seen as the driving forces behind the globalization of the fashion industry (Gereffi, 2005a). In latest decades, the fast fashion industry increasingly moved its apparel production processes to developing countries with low labor costs (Turker & Altuntas, 2014). However, because of the environmental, economic and social sustainability issues in these countries, fast fashion retailers increasingly include sustainability initiatives in their strategic behavior and pursue identical standards in labor and manufacturing conditions in their supply chains (Turker & Altuntas, 2014). Recently, large retailers have begun to recognize that it may not be enough to solely manage the sustainability of first-tier suppliers (Tachizawa & Wong, 2014). To be sustainable, retailers more and more realize the relevance of managing their supply chains and their dependence on the suppliers’ and sub-suppliers sustainability practices (Grimm, Hofstetter, & Sarkis, 2016). Although retailers may have little control over sub-suppliers’ sustainability behavior external stakeholders, like NGOs and consumers, are still likely to hold retailers responsible for the sustainability performance of their upstream supply chain partners (Tachizawa & Wong, 2014; Hartmann & Moeller, 2014). This is primarily the case for retailers in the fast fashion industry, because media and public opinion are likely to exert pressure on them (Seuring & Muller, 2008).
In reality, it seems that suppliers located in the second-tier or further upstream, also called the sub-suppliers (Grimm, Hofstetter, & Sarkis, 2014), are often the cause of the most critical social and environmental problems in the supply chain (Tachizawa & Wong, 2014; Plambeck, 2012). For example, Zara has been accused of failing to deal with employment abuses in its supply chain, after the Brazilian government made public that Zara’s Brazilian suppliers contracted with sweatshop factories (Butler, 2015).
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not visible for the public eye (Lee, Plambeck, & Yatsko, 2012b) and located in developed countries with a lack of government enforcement of labor laws (Huq, Stevenson, & Zorzini, 2014). Lastly, because buyers often imply only a small percentage of the business of sub-suppliers, they do not have enough influence over sub-suppliers (Plambeck, 2012).
Even though the subject is important, little empirical research has been conducted on the management of sub-suppliers’ sustainability in supply chains (Walker & Jones, 2012; Tachizawa & Wong, 2014; Grimm et al., 2014, 2016). A notable exception is the conceptual paper of Tachizawa & Wong (2014), in which they propose framework that combines approaches and contingency variables to manage the sustainability of sub-suppliers. This current paper goes beyond this study by examining the specific contingencies that determine the choice of certain buyer’s approach in the context of social sustainability in the fast fashion supply chain. Although consumers worldwide increased their sensitivity to social issues, it seems that literature paid little attention to the social dimension of sustainability in the fast fashion industry (Klassen & Vereecke, 2012; Huq et al., 2014). This topic is, however, important to study, because social sustainability improvements helps vulnerable production workers, supports the development of a long-term relationship between the buyer and its suppliers and stimulates economic growth (Huq et al., 2014).
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question: How do fast fashion retailers manage their sub-supplier’s social sustainability and what are the antecedents for their respective management approaches?
To investigate the antecedents for the buyer’s approaches to manage sub-suppliers’ social sustainability, this study used a multiple case study methodology. By not solely relying on company reports, this study overcomes a recognized limitation of similar studies analyzing these reports, namely that “words might speak louder than actions” (Turker & Altuntas, 2014:848). The study sample was selected from European fast fashion retailers who fully outsource their production to low-wage developing countries in Asia, are headquartered in Europe, face a high level of stakeholder pressure and have a BSCI membership.
This paper contributes to the social sustainability literature in the fast fashion industry, because this lags behind the other dimensions of sustainability (Klassen & Vereecke, 2012; Huq et al., 2014). Furthermore, this study shifts the focus from the well-researched management of first-tier suppliers to the relatively unknown area of managing sub-suppliers in the fast fashion supply chain (Huq et al., 2014). Thus, this paper advanced the literature on sustainable and multi-tier supply chain management by examining the management of sub-suppliers’ social sustainability in the fast fashion supply chain.
The paper is structured as follows: first, the literature review discusses the social sustainability in the fast fashion supply chain and different buyer’s approaches to manage first-tier suppliers’ and sub-suppliers’ social sustainability in the supply chain. Second, the method section explains the method used in this research. Third, the result section involves two types of analysis: within-case analysis and cross-case analysis. In the discussion section, the outcomes are discussed and compared with existing literature. The last section consists of a conclusion, limitations and implications for future research.
Literature review
Social sustainability in fast fashion supply chains
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fast fashion industry is to encourage masses of customers to purchase their products more frequently (Bhardwaj & Fairhurst, 2010). And it seems to be an aim with success. Inditex, noted a doubling of annual sales, from 9,1 billion Euros in 2007 to 18,1 billion Euros in 2014 (Inditex Annual Report, 2014). This is realized through low cost production strategy and offering trendy, inexpensive clothing that is continuously refreshed (Bhardwaj & Fairhurst, 2010). Consequently, this means a shortened cycle from design to store availability, taking four weeks or less instead of the traditional six months (Mihm, 2010) and the extension of seasons to twenty per year, for example, in case of Zara (Christopher, Lowson, & Peck, 2004). Moreover, the faster pace of fashion trends and consumers desire for newness leads to various buyer requirements (Barnes & Lea-Greenwood, 2006).
After the 1980s, the growth and popularity of the fast fashion concept forced the current large fashion retailers to change their supply chain structure (Choi, 2013). Fashion retailers moved to a supply chain that is buyer-driven (Gereffi, Humphrey & Sturgeon, 2005), fast and highly responsive (Tokatli, 2007) and has a quick inventory turnover with reduced lead times (Tyler, Heeley, & Bhamra, 2006). Buyer-driven chains “are characterized by tiered production networks involving countries that offer a combination of low labor costs, relevant skills and production capacity” (Tyler et al., 2006: 317), which fashion retailers found in East Asia (Gereffi, 1999). According to Barnes & Lea-Greenwood (2010), several concepts made these structural changes possible, such as just-in-time (JIT) (Bruce, Daly, & Towers, 2004), quick response systems and agile supply chains (Christopher et al., 2004), having the fashion consumer at its heart (Barnes & Lea-Greenwood, 2010). However, the new ways of doing business changed supply chain structures in the fast fashion industry negatively and influenced both environment and society (Turker & Altuntas, 2014). Fast fashion retailers responded to these environmental and social issues by adopting several sustainable strategies and practices (Turker & Altuntas, 2014).
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working conditions, poor wages, long working hours and child labour (Perry & Towers, 2013).
The fast fashion industry has got much public attention and few industries are more challenged by sustainability concerns from media and consumers (Caniato, Caridi, Crippa, & Moretto, 2012). Companies not only account for their own sustainability but might also be held responsible for the sustainability performance of suppliers in distant developing countries (Huq et al., 2014) and eventually the social performance of the supply chain as a whole (Turker & Altuntas, 2014). Supplier management plays a crucial role in ensuring the social sustainability in the upstream supply chain (Foerstl, Reuter, Hartmann, & Blome, 2010). Supplier selection and logistics decisions are key tasks of supply chain managers, and therefore, play an essential role in the operationalization of the social sustainability of a company’s actions in terms of its influence on society (Perry & Towers, 2013). Supply chain managers are faced with the challenge to realize supplier compliance with labor rights throughout the upstream fashion supply chain, including the sub-suppliers (Mares, 2010), mainly because the growing complexity in the global supplier networks may reduce the visibility in the supply chain (Caridi et al., 2013) and influence the control of social issues in lower-tier suppliers (Perry & Towers, 2013).
Buyer’s approaches for managing the social sustainability of sub-suppliers
In their conceptual paper Tachizawa & Wong (2014) distinguished four approaches to manage sustainability in multi-tier relationships: direct approach, indirect approach, work with third parties approach and don’t bother approach. These four approaches are also used in the current paper to discuss different approaches that retailers in the fast fashion industry may use to manage the social sustainability at sub-suppliers. The four different approaches are discussed below.
Direct approach
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direct contact with the sub-suppliers contains different lower-tier supplier management practices (Tachizawa & Wong, 2014). First, the buyer requires sub-suppliers to comply with certain standards. Boyd et al. (2007) points to the task of the buyer firm to implement code of conducts within their entire supply chain aimed at ensuring suppliers to engage in social sustainable initiatives. Also, Awaysheh and Klassen (2010) found that when the supplier was located further upstream in the supply chain, managers increasingly make use of codes of conduct to ensure social sustainability performance. Second, the buyer may make use of a directed sourcing strategy, where the buyer establishes a contract with sub-suppliers of his choice and requires the first-tier supplier to purchase from this sub-supplier (Mena et al., 2013). Third, the buyer often makes use of monitoring and auditing mechanisms to physically inspect the sub-supplier’s sustainability performance (Vachon & Klassen, 2006; Awaysheh & Klassen, 2010; Foerstl et al., 2010). The last practice contains the development of the sub-suppliers. For example, McCarthly et al. (2012) highlighted the benefits of development and training of employees to facilitate supplier’ social sustainability performance. Such increased interaction with the sub-suppliers, lowers the barrier of information asymmetry (Simpson, 2010) and improves the supply chain transparency (Caridi et al., 2013). However, according to Mena et al. (2013) this approach also requires a significant amount of time and effort for managers. Nevertheless, a buyer that has established a direct contact with its sub-suppliers is able to influence their sustainability performance (Mena et al., 2013).
Indirect approach
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in which buyers may exert pressure on their first-tier suppliers, for example via codes of conduct, to require social sustainability performance from sub-suppliers (Tachizawa & Wong, 2014). A second practice to manage sub-suppliers is the diffusion of certification in the entire supply chain, requiring upstream suppliers to adopt ISO 26000 to align their social sustainability practices (Castka & Balzarova, 2008). A final managerial practice is the buyer’s support to first-tier suppliers in the monitoring and/or collaboration with sub-suppliers to improve the social sustainability (Tachizawa & Wong, 2014).
Work with third parties
In this approach the buyer firm works with third parties or gives responsibility to other firms, such as NGOs, competitors or institutions, to develop and implement sustainability standards (Tachizawa & Wong, 2014) like, codes of conduct and social guidelines (Peters, Hofstetter and Hoffmann, 2011). Furthermore, NGOs and governments can monitor and audit suppliers and provide guidance to supplier’ social sustainable behavior (Li, Zhao, Shi & Li, 2014). However, it is still important for the buyer to provide input to third parties and control their effectiveness instead of delegating all responsibilities to them (Tachizawa & Wong, 2014). For example, Li et al. (2014) found that H&M chooses its own responsible suppliers and by closely collaborating with NGOs and the governments they can deal with social sustainability challenges. Moreover, H&M jointly tries to find solutions for social issues as has been shown by the meeting between H&M CEO and the Prime Minister of Bangladesh to show H&M’s support to provide a fair living wage for their workers (Li et al., 2014). Thus next to delegating the development, implementation and monitoring of standards to third parties, it is also important to collaborate with them in these practices.
To increase the power over their “independent” sub-suppliers and to improve supplier’s compliance with the social sustainability standards, buyers can also form partnerships with industry associations or competitors to exert pressure that can contribute to improve social sustainability conditions in the supply chain (Grimm et al., 2014). These stakeholders can jointly develop and implement codes of conduct, certification programs or self-reporting schemes to regulate the social sustainability practices, also known as industry self-regulation (Prado, 2013).
Don’t bother
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2014). This approach is often used when the buyer has limited power to diffuse social sustainability behaviors among the sub-suppliers and therefore control on suppliers is restricted to the first-tier suppliers (Ciliberti, Pontrandolfo & Scozzi, 2008). This limited power is often the result of a lack of information and transparency about sub-suppliers, cultural differences or geographical distance (Ciliberti et al., 2008; Awaysheh & Klassen, 2010). For example, in their study of Bangladesh suppliers in the apparel industry Huq et al. (2014) found that buyers often only consider their first-tier suppliers and not the sub-suppliers’ social sustainability, while first-tier suppliers themselves may fail to inform the buyers about their sub-suppliers or neglect to reveal information about their suppliers’ practices.
The above discussed approaches do not have to be used separately and may be complementary to each other, “i.e. a firm may simultaneously rely on more than one approach for a specific supplier” (Tachizawa & Wong, 2014:656). “For example, a firm may collaborate with lower-tier suppliers by training them on cleaner production methods and, at the same time, work with an NGO to design an industry-specific environmental standard”. (Tachizawa & Wong, 2014:656). For example, H&M both develops and trains its suppliers in ethics and collaborates with NGOs and governments to develop new social standards to facilitate the sustainability in the fast fashion supply chain (Li et al., 2014). Tachizawa & Wong’s framework (2014) is provided in Figure 1.
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Thus, the retailers may manage their sub-suppliers directly, through their first-tier suppliers, through working together with third parties and/or not manage the sub-suppliers. These buyer‘s approaches are rather structural and require refinement into governance mechanisms. Once one or more of the buyer’s approaches are chosen, retailers can then decide on the governance mechanisms. Although the literature may make use of different terms, the governance mechanisms that may be used to support and improve the management of sustainability can be divided into supplier monitoring and supplier collaboration (Klassen & Vachon, 2006, 2008). Supplier monitoring and supplier collaboration are two different options to improve sustainability management, involving inspection and mutual problem-solving respectively (Klassen & Vachon, 2006). Although supplier monitoring and supplier collaboration are well-known governance mechanisms to manage the first-tier suppliers’ social sustainability, they can also be applied to the management of sub-suppliers (Grimm et al., 2016).
Governance mechanisms: monitoring and collaboration
Literature on sustainability in the fast fashion supply chain extensively investigated the management of first-tier suppliers (Huq et al., 2014; Perry & Towers; 2013; Jiang, 2009; Yu, 2008; Locke, Kochan, Romis, & Qin, 2007) and two governance mechanisms are identified: supplier monitoring and supplier collaboration (Li et al., 2014; Turker & Altuntas, 2014; Perry & Towers, 2013; Awaysheh & Klassen, 2010; Vachon & Klassen, 2006, 2008).
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sustainability practices (Huq et al., 2014). As collaboration encourages shared learning and the development of best practice, it improves the implementation of social sustainability (Perry and Towers, 2013).
According to Grimm et al. (2014) supplier monitoring as well as supplier collaboration can be used by buyers to manage their sub-suppliers. For example, although Nike historically focused little on its sub-suppliers, it now monitors hundreds of second-tier material suppliers (producers of leather, fabric and zipper) to its contract footwear and apparel factories (Lee et al., 2012b). In 2014, H&M conducted 225 audits at their second-tier suppliers and keeps working to further increase the transparency of the supply chain (H&M Sustainability Report, 2014). For example, H&M in collaboration with other brands in the Sustainable Apparel Coalition are working on the HiGG Index, which is a tool to measure the sustainability performance of fashion products, brands and suppliers in the entire upstream supply chain. Such transparency makes sustainability a key driver in the fast fashion industry (H&M Sustainability Report, 2014).
The literature contains little research about managing the social sustainability at the sub-suppliers operations. The few exploratory studies, which developed theory about the how buyers manage the sub-suppliers’ sustainability are studied in the context of the food and electronic industry (Grimm et al., 2014, 2016), but not in the context of the fast fashion industry (Perry & Towers, 2013; Huq et al., 2014). The approaches distinguished in the conceptual paper of Tachizawa & Wong (2014) are not very fine-grained and not applied to a specific industry. There seems to be little critical analysis and theory building about the management of sub-suppliers’ social sustainability in the fast fashion industry. In reality, it seems to be a new, inexperienced and underdeveloped task in business practice to manage the sub-supplier in the supply chains and there is little knowledge from and for academics and retailers (Grimm et al., 2016). Therefore, this study will be theory building to refine the buyer’s approaches by Tachizawa & Wong (2014) and provide more knowledge on the antecedents in the context of social sustainability the fast fashion supply chain. The methodology is explained in the next section.
Methodology
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chain. Because of the paucity of theory and complexity, this study is based on an exploratory case study research in order to develop more understanding, to develop theory and to create a framework (Stuart, McCutcheon, Handfield, McLachlin & Samson, 2002).
Research Design
This paper tries to understand how fast fashion retailers manage their sub-suppliers’ social sustainability and what the antecedents are for their buyer approaches. Because the question is a “how” and a “what” question, a case study research design is most suitable (Voss, Tsikriktsis, & Frohlich, 2002). The phenomenon can be studied in-depth in its own environment (Yin, 1994), and relevant theory can be created from the increased understanding through uncovering the factors that determine the choice of particular buyer approaches to manage sub-suppliers’ social sustainability in practice (Voss et al., 2002).
A multiple case study approach is chosen, because multiple cases are a powerful way to build theory as these cases allow for replication and extension among individual cases (Eisenhardt, 1991). Even though single-case studies can describe a phenomenon in greater depth, multiple cases are a stronger base for theory development (Yin, 1994). Using multiple cases makes the theory better grounded, more generalizable and, more robust because it is based on varied empirical evidence (Eisenhardt & Graebner, 2007). Moreover, conducting a multiple case study is powerful to develop theory, because it allows for replication (Eisenhardt, 1991). A multiple case study allow for comparisons between cases that explains whether an appeared finding is specific to the single case or consistently replicated by various cases (Eisenhardt & Graebner, 2007). Furthermore, multiple case study is appropriate for theory development and to identify and describe the key variables (Voss et al., 2002). Because the aim of this study is to identify and describe the antecedents for the choice of particular buyer approaches to manage the sub-suppliers’ social sustainability, a multiple case study is therefore chosen as methodology to investigate this.
Case selection
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score on these criteria. This provides an initial insight into the retailers’ sustainable supply chain management in terms of social sustainability and transparency. This provided a list of fast fashion retailers, on which the following four criteria were applied: (1) the fast fashion retailers are headquartered in Europe. This information was provided on the retailers’ websites. (2) The retailers have outsourced their production of clothing to suppliers located in low-wage countries in Asia, where a difference in legislation, a lack of law enforcement and another cultural context may allow suppliers’ business practices that may violate the retailer’s social sustainability requirements (Awaysheh & Klassen, 2010). This criteria was ensured by visiting the respective retailers’ website, as this information about the sourcing countries is provided here (3) The focus is on retailers on whom consistently high levels of stakeholder pressure is exerted to gain more transparency in their supply chain and to perform sustainable supply chain management along the whole supply chain that would require the alignment of social sustainability standards along the whole supply chain, including the sub-suppliers. The high levels of stakeholder pressure was ensured by reading the press releases and reports from NGOs, like the Clean Clothes Campaign, who name and shame the respective retailers for the lack of transparency in the supply chain and insufficient sustainable supply chain management (Schone Kleren Campagne, 2016). (4) The fast fashion retail the majority of buyers have a Business Social Compliance Initiative (BSCI) membership, which indicates the retailer’s commitment to current business practices for improvement of labour conditions along their supply chain. Based on these criteria, 14 potential Dutch fast fashion retailers were identified. The sustainability policy and code of conduct of these retailers was investigated, to find out whether these buyers mention the aim to implement and manage sustainability in their supply chain. This was the case in all the 14 identified retailers. Given that the Dutch fast fashion retail buyers are currently blamed by Dutch NGOs, media and customers for their lack of transparency and the existence of social issues in the chain, it was a challenge to find retailers that were willing to participate in the research. Of the identified 14 fast fashion retailers, only 4 retailers were willing to provide information about their supplier management along the fast fashion supply chain. One retailer had to cancel the interview. Eventually, three retailers that are committed to improve the labour conditions at their supplier operations along the supply chain were selected: Retailer A, Retailer B, and Retailer C. Table 1 provides an overview of the cases.
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tier suppliers and sub-suppliers. This was one of the reasons for them to join the BSCI, which is established by the Foreign Trade Association and is “a leading business-driven initiative supporting retailers, importers and brands to improve working conditions in supplying factories and farms worldwide” (BSCI, 2016a:1). Moreover, the Dutch Minister of Foreign Trade and Development publicly requires the Dutch clothing industry, including the respective retailers, to increase the transparency in the supply chain and to take more responsibility for the sustainability in the chain, which resulted in a Dutch improvement plan for the Dutch clothing industry called “the Convenant” (SER, 2016; India Committee of the Netherlands, 2016). The Convenant is planned to be implemented in June, 2016. However, before this improvement plan really starts to work, at least 35 fashion retailers have to sign this plan. If that fails, the only option according to the Minister is to introduce legislation requiring all retailers to perform due diligence, which means that the retailers have to take responsibility for their supply chain (India Committee of the Netherlands, 2016). Operating in the context of the fast fashion industry, having their production outsourced to low wage countries in Asia, being a BSCI member, and feeling the same stakeholder pressure, allows for an in-depth analysis and a comparative analysis of the three cases. The study of multiple cases increases the generalizability of the conclusions (Voss et al., 2002). The research is based on literal replication, to “predict similar results” (Voss et al., 2002: 203) to assure external validity (Yin, 1994). Table 1 provides an overview of the case study retailers.
Table 1: Overview of the case study retailers
Retailer A Retailer B Retailer C
Industry Apparel Apparel Apparel
Specialty Trendy clothing for
men, women and kids
Women’s lingerie Baby clothing and maternity wear
Customers Consumers Consumers Consumers
Requested sustainability standards
BSCI Code of Conduct
Own code of conduct
BSCI code of conduct
Own code of conduct
BSCI code of conduct
Headquarter The Netherlands The Netherlands The Netherlands
Operations Europe Europe Europe
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employees employees employees
Main sourcing countries 48% from China, 39% from Turkey, and 12% from Bangladesh. Largest sourcing volume from Asia among others China and Bangladesh
Largest sourcing volume from Asia among others China and Bangladesh Interview partner’s
position
CSR manager CSR manager CSR manager and
quality/safety manager
Primary data Interview Interview Interview
Secondary data Own code of conduct
Website
Own code of conduct Website
Website
Data collection
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construct validity was guaranteed, by collecting data from several sources of evidence (Yin, 1994). The use of the different methods of data collection ensures triangulation and strengthens the construct validity of the research even further (Voss et al., 2002). Reliability is assured by storing all the data of the retailers into a database, including interview transcripts, retailers’ code of conduct, data on the retailers’ website, NGO reports (Yin, 1994).
Data analysis
After the data collection in the field, the mentioned data was put into a database. The interview transcripts and the secondary data were coded using the coding program Atlas.ti. The coding of the data is essential to conduct effective case research (Voss et al., 2002). Using open coding, the individual sentences and statements of both primary and secondary data sources are given codes and consequently grouped into higher-order categories (Voss et al., 2002). Reducing data into codes and categories allows for a reduction of data complexity (Voss et al., 2002).
The diversity of codes covered the current retailers’ management of sub-suppliers’ social sustainability and also considered the antecedents for the particular buyer approaches, which is in line with the research question. The chosen codes attempted to match the theoretical constructs that were identified in the theoretical background. The codes were coupled to established theoretical constructs, like Tachizawa & Wong’s (2014) buyer’s approaches to manage sub-suppliers’ sustainability, buyer power, information transparency, and cultural and geographical distance. An illustration of the coded data and a coding scheme are provided in Appendix B. Next, the two steps suggested by Eisenhardt (1989) are followed in analyzing the data. To become familiar with each case, the pattern of the data is first analyzed within the cases by making detailed case study descriptions for each case to generate more insight (Eisenhardt, 1989). In an incremental way, concept networks were created to visualize key independent and dependent variables and the relationships between them (Miles & Huberman, 1994). Once a unique pattern of each case has emerged it is searched for cross-case patterns, in the attempt to make the drawn conclusions more generalizable (Voss et al., 2002). Also, the internal validity is increased by the search for these patterns (Yin, 1994).
Case studies Case setting
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Jayarathne 2012). However, retailers may also choose to source indirectly through their own buying offices and/or agents in the country where the prime manufacturer is also located (McCarthy & Jayarathne 2012) or source from contracted foreign or domestic buying offices/agents. Apart from the retailers’ sourcing route fabric has to go through different stages before it reaches the apparel production factory, involving many sub-suppliers. Stages preceding the apparel production factory are: fabric dying and/or printing, cotton knit fabric production (weaving), cotton fibre yarn production (spinning) and the raw materials: cotton farming (Perry & Towers, 2013). The fast fashion supply chain can be characterized as a captive value chain (Gereffi et al., 2005), because the production factories only assembles imported inputs, which involves low-value added tasks, and the requirement of explicit coordination such as, cut fabric and specific instructions (Gereffi et al., 2005). Recently, some first-tier apparel production factories upgraded from simple ‘cut-make-trim’ to full-package supply’ (Azmeh & Nadvi, 2014; Gereffi et al., 2005) and became suppliers that coordinate the whole production process from raw materials to the assembly of semi-finished products, also called vertical integrated suppliers (Perry & Towers, 2013).
The fast fashion industry is characterized by fierce competition, because of the globalization process, market dynamicity and the competitive pressure (Caridi et al., 2013). To face the challenges of the industry, fast fashion retailers have outsourced their production to complex supplier networks in low-wage countries in Asia, often located thousands of kilometers from the retailers’ head office (Caridi et al., 2013). Fast fashion retailers have to deal with supplier networks that are vertically complex, as they involve a high number of tiers in the network; horizontally complex, because of the high number of suppliers in each tier; and spatial complex, because the buyers and suppliers are often geographically dispersed in the supplier network (McCarthy & Jayarathne, 2012; Perry & Towers, 2013). The supply chain becomes even more complex due to the many actors in between the tiers in the supply chain network, including traders, brokers and wholesalers among others. The commercial success or failure of the fast fashion retailer is mostly determined by the capability to manage multiple relations with its suppliers in the supply chain (Caridi et al., 2013). Figure 2 in Appendix C provides a typical fast fashion retailer’ supply chain.
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retailers responsible for what happens in their supply chain (Awaysheh & Klassen, 2010). Major sustainability concerns include unsafe and unhealthy working conditions, unfair payment of workers, child labour and excessive working hours (Awaysheh & Klassen, 2010). Due to these social problems, retailers increasingly started to use third-party codes of conduct or third-party certification to implement social sustainability in the supply chain (Huq et al., 2014). However, as companies face difficulties in managing the social sustainability issues (Klassen & Vereecke, 2012), several business initiatives started to arise to guide these companies and work together towards a social sustainable global fast fashion supply chains. One such an initiative is The Accord on Fire and Building Safety in Bangladesh (the Accord). “It is a five year independent, legally binding agreement between global brands and retailers and trade unions designed to build a safe and healthy Bangladeshi Ready Made Garment (RMG) Industry” (Bangladesh Accord, 2016). All the three studied cases signed this agreement.
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corrective actions within 12 months and a mandatory follow-up audit evaluates the actual implementation (BSCI, 2016c). Also, BSCI requires its participants to collaborate with each other with the aim to jointly improve the working conditions in the suppliers’ facilities (BSCI, 2014a). Moreover, BSCI offers both suppliers and BSCI members training and workshops about supplier management, safety on the work floor and communication between factory management and its employees (BSCI, 2016a).
Retailer A
Retailer A is a Dutch retailer specialized in trendy ladies wear, menswear and children‘s clothing and operating internationally. Retailer A has attempted several sustainability initiatives for its supply chain. To show their internal and external stakeholders its commitment to improve the working conditions at their suppliers, Retailer A developed their own Code of Conduct, which is based on the International Labour Organization guidelines and Universal Declaration of Human Rights among others (Retailer A’s Code of Conduct). Retailer A is a member of the BSCI and requires its suppliers to comply with the BSCI Code of Conduct (Retailer A’s website). Furthermore, Retailer A aims at establishing a safe working place for their employees in the supply chain and therefore has signed the Bangladesh Accord on Fire and Building Safety (Retailer A’s website). Lastly, Retailer A together with other retailers, participated in a project in Turkey led by the Fair Labour Association (Retailer A’s website). According to Retailer A’s CSR manager this projects’ aim was to map the entire supply chain and to identify the risks of child labor in the different stages of production, such as harvesting, cotton ginning, spinning and weaving.
Sustainability requirements towards its suppliers
As a member of BSCI, Retailer A requires all suppliers to comply with the BSCI Code of Conduct (Retailer A’s website). According to the BSCI Code of Conduct, Retailer A’s direct suppliers, which are Retailer A’s agencies and first-tier suppliers, should communicate the BSCI Code of Conduct to their own suppliers and are expected to disclose these partners (BSCI, 2014b). However, the reality seems to be different.
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Motivation for managing the supply chain
Retailer A increasingly is faced with stakeholder pressure from government, NGOs and consumers, to take more responsibility for the suppliers in the supply chain, including the sub-suppliers.
“The public opinion is that we have to take responsibility for the suppliers were we source our products, even though we do not own these supplier factories. Thus, we are expected to take responsibility for the suppliers where we don’t have control or ownership over ourselves” (Retailer A, CSR manager)
According to Retailer A, they source 80% of their products from 20% of their suppliers. The largest sourcing volumes are from Asia with 48% from China, 39% from Turkey, and 12% from Bangladesh. In these countries a safe and healthy working environment is not always self-evident (Retailer A’s website, 2016). According to Retailer A, the sustainability performance varies per factory and some factories are more developed than others in terms of social sustainability.
Approaches for managing the first-tier suppliers
Being a member of BSCI, means that Retailer A is required to regularly conducts audits and support their suppliers in the improvement of the working conditions (BSCI, 2014a). Retailer A’s own sourcing office in Asia conducts pre-audits at the first-tier suppliers by means of a questionnaire or checklist. In this way, they are in direct contact with their first-tier suppliers and gain overview of the supplier’s social sustainability. Moreover, Retailer A organizes when an audit has to take place and at which supplier factory and communicates this to BSCI’s recommended independent auditing companies, who subsequently perform the audit of these suppliers’ facilities according to the BSCI requirements.
“We do not conduct audits ourselves, rather we let independent auditing companies do that for us. However, we do conduct pre-audits and factory visits to get an impression of the initial level of working conditions and quality management in the factory that enables us to make the decision if we want to contract with this supplier in the first place”. (Retailer A, CSR manager)
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supplier. After having received the auditor’s finding report, Retailer A supports the development of the remediation plan and assists in the implementation of the corrective actions needed. In this way, we guide our suppliers step-by-step to further improve the working conditions (Retailer A’s website, 2016). Retailer A shares capacity plans with their key suppliers, through which they can prepare for peaks and troughs in the production of clothing. In this way, extreme working hours are prevented (Retailer A’s website, 2016). Retailer A tries to develop long-term relationships with its first-tier suppliers (Retailer A’s website, 2016). According to Retailer A’s CSR manager, a long-term relationship creates trust and this is beneficial for the transparency of the working conditions in the supply chain. Also, a long-term buyer-supplier relationship may increase the willingness of suppliers to increase their efforts for the retailer and may offer a lower price. Lastly, according to Retailer A’s CSR manager they remind their first-tier suppliers to attend the BSCI training and workshops and several of their suppliers followed such a training. They consider providing extra tools for supplier development:
“Although BSCI provides us a lot of tools and information about supplier development, we consider providing some extra tools and training next to those from BSCI” (Retailer A, CSR manager).
Approaches for managing sub-suppliers
Retailer A’s main focus is on the management of the first-tier suppliers’ social sustainability. However, Retailer A intends to indirectly manage their sub-suppliers in the future, by involving the first-tier suppliers. Currently, Retailer A stimulates first-tier suppliers to be involved in the management of sub-suppliers’ social sustainability, but does not monitor this:
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main focus is on the management of first-tier suppliers’ social sustainability, with whom they have a direct contact, and the mapping of the other first-tier suppliers, who are not yet transparent.
According to Retailer A’s CSR manager, the higher number of actors in their supply chain is one of the reasons why there is a lack information transparency between Retailer A and its sub-suppliers. The existence of many traders and brokers between the tiers, the existence of agencies and other intermediaries between the retailer and the first-tier suppliers and the fact that suppliers may be very specialized, makes the Retailer A’s supply chain complex and fragmented. What makes it even more complex is the risk of first-tier suppliers subcontracting their production to locations unknown to the retailer:
“One of the challenges is that production may take place on a location, which was not the agreement with our first-tier suppliers. It is quite difficult to find this out, because they do it secretly and won’t tell it to us.” (Retailer A, CSR manager)
According to Retailer A’s CSR manager the many different actors in the supply chain may sometimes have the incentive to not disclose their suppliers or to provide little information about them. Originally, Retailer A’s direct suppliers are unwilling to disclose their suppliers, because the direct suppliers fear that the retailer will by-pass them. Also, the lack of buying power over their first-tier suppliers forms an obstacle to manage the sub-suppliers through first-tier supplier involvement. Retail A’s CSR manager stated that their first-tier suppliers gain power from the fact that they have more buyers than solely Retailer A, which gives the suppliers relatively more power. Being one of the many buyers decreases Retailer A’s power to require to be involved in the social sustainability management and to pressure sub-suppliers’ information disclosure. Although the large global fast fashion retailers are increasingly gaining greater information transparency in their fast fashion supply chain, smaller retailers face more difficulties:
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effort they want to put in buyers’ requirements and the less willingness there is to disclose their supply base. However, this effort and willingness can increase when you have a long-term buyer-supplier relationship. The information disclosure is based on trust, trust that you won’t by-pass the supplier, and this usually takes time to build. Thus, it is difficult”. (Retailer A, CSR manager)
An obstacle that Retailer A faces both in the management of the first-tier supplier and sub-suppliers is cultural distance. According to Retail A’s CSR manager, this has to do with a difference between the Western world and Asia, in terms of norms, values and mentalities. Lastly, geographical distance is seen as an obstacle for the management of the supply chain. Retailer B
Retailer B is a retailer specialized in women’s lingerie, swimwear and underwear and is working hard towards sustainability in their supply chain. Based on the International Labour Organization guidelines and Universal Declaration of Human Rights among others, Retailer B introduced their own Code of Conduct to ensure that all their internal employees and suppliers understand their values, which have to be considered when doing business with Retailer B (Retailer B’s Code of Conduct, 2016). Retailer B is a member of the BSCI and aims to improve the working conditions in their supply chain (Retailer B’s website, 2016). Moreover, the retailer signed the Bangladesh Fire and Building Safety Accord and stated that all the Bangladesh production factories, where Retailer B sources, are inspected for fire-, building- and electricity safety (Retailer B’s website).
Sustainability requirements towards its suppliers
As a member of BSCI, Retailer B requires its suppliers to comply with the BSCI Code of Conduct. Retailer B requires its suppliers to sign this Code of Conduct, thereby recognizing the Code of Conduct and comply with the standards (Retailer B’s website).
Motivation for managing the supply chain
Retailer B feels the increased stakeholder pressure to take responsibility for the working conditions in the supply chain, including the first-tier suppliers and sub-suppliers:
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four million people dependent on a job in the apparel industry. A serious problem will be created if retailers stop sourcing from these production countries. I think its better to work together with your suppliers and to jointly improve the social issues they face in the apparel production, in stead of leaving them” (Retailer B, CSR manager)
Although Retailer B sources from different suppliers, it is mentioned that 80 percent of the end products are sourced from 20 percent of Retailer B’s first-tier suppliers. Retailer B mainly sources directly from the first-tier suppliers, of which some are vertically integrated. The largest sourcing volumes are from the Far East, with different cultural backgrounds and lower social conditions (Retailer B’s Code of Conduct).
Approaches for managing first-tier suppliers
Following the BSCI approach, Retailer B both monitors its suppliers and collaborates with them to improve the working conditions in the first-tier suppliers’ factories. Similar to Retailer A, they make use of the BSCI audit and training tools. In case the audit reports show of areas for improvement, Retailer B together with the supplier, develops an improvement plan for the factory to achieve full compliance with the code within an acceptable time period. Retailer B’s CSR manager visits the factories to conduct follow-up audits. Retailer B aims a long-term relationship with its suppliers. According to Retailer B’s CSR manager, they have some business-relationships that already exist for 15 years. Retailer B builds long-term relationships with their first-tier suppliers in order to ensure social and environmental sustainability, continuity and quality of the products. Next to the provided training of BSCI, Retailer B provides training to its first-tier suppliers to manage and improve their social sustainability.
Approaches for managing sub-suppliers
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build on the first-tier suppliers’ relationship with its sub-suppliers. In case Retailer B sources from suppliers who vertically integrated the dying process, there is greater information transparency between the retailer and the sub-suppliers.
Although currently Retailer B mainly focuses on the first-tier suppliers, they are intended to manage the sub-suppliers’ social sustainability through first-tier supplier involvement. However, according to Retailer B’s CSR manager this involves many obstacles. Similar to case of Retailer A, one of these obstacles is the fragmentation and complexity of their supply chain. Similar to the case of Retailer A this may also involve the risk of suppliers who outsource the production to hidden factories, unknown to the retailer. Moreover, also Retailer B’s first-tier suppliers are often unwilling to disclose their own supply base because they fear being by-passed by the retailer. Retailer B’s quotes are displayed in the illustration of coded data in Appendix B. However, Retailer B requires the contracted agencies to disclose information about the production factories and monitors this process, which is one of the reasons why they have a complete overview of their first-tier suppliers and their social sustainability behavior. Finally, Retailer B also emphasizes the importance of the development of long-term buyer-supplier relationships to lower this suppliers’ fear.
Retailer B mentioned power asymmetry between buyer and first-tier supplier, which is caused by the buyer’s dependency on the first-tier supplier, as another obstacle for the management of sub-suppliers’ social sustainability:
“ (…) We are dependent on the information the first-supplier is willing to disclose” (Retailer B, CSR manager).
According to Retailer B’s CSR manager, cultural differences make it difficult to require suppliers’ compliance with the BSCI Code of Conduct and to manage suppliers’ social sustainability. Retailer B mentioned the conflict between Chinese regulations and the Code of Conduct requirements:
“It is difficult to give Chinese workers the right to form unions, because in China it is not allowed for employees to form a union” (Retailer B, CSR manager).
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workers are often migrant workers from other provinces who cannot transfer the benefits they have build up back to their home province (Clean Clothes Campaign, 2015).
“Although we want employees be treated well by offering them social insurance just like in the Western world, Chinese workers value it less because they can not take it with them when moving to another place” (Retailer B, CSR manager)
Retailer C
Retailer C is originally a Dutch retailer specialized in baby clothing and maternity wear. By taking several sustainability initiatives in its supply chain, Retailer C continuously searches for feasible steps to create responsibility for people and society at large (Retailer C’s website). Therefore, they became a member of BSCI and adhered the BSCI Code of Conduct, aiming for the improvement of working conditions in fashion supply chains. Also, Retailer C signed the Bangladesh Accord on Fire and Building Safety and this makes Retailer C committed to the aim of a safe and sustainable Bangladesh (Retailer C’s website).
Sustainability requirements towards suppliers
As a member of the BSCI, Retailer C adheres the BSCI Code of Conduct. All suppliers who produce goods for the retailer have to comply with this code (Retailer C’s website).
Motivation for managing the supply chain
Retailer C faces the pressure from Dutch NGOs, media and government to improve the sustainability along their supply chains, including taking responsibility for the sub-suppliers operations.
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A large part of Retailer C’s products are produced in low wage countries in Asia, such as Bangladesh. Good working conditions, as described in the International Labour Organisation (ILO), are not as self-evident as in the Western world and poses the risk of several social issues in the supply chain (Retailer C’s website).
Approaches for managing the first-tier suppliers
Retailer C follows the BSCI approach and both the retailer and its first-tier suppliers make use of the BSCI provided training and audit tools. Retailer C’s management of the first-tier suppliers’ social sustainability is a continuous process of supplier monitoring, supplier collaboration and improvement. Retailer C aims long-term buyer-supplier relationships and some of these already exist for 8 years. Similar to the other studied cases, Retailer C regularly conducts factory visits to get an impression of the factory’s sustainability and independent auditors conduct social compliance audits. However, Retailer C states that these visits and audits are rather limited as a representation of the real state of the suppliers’ factory, because in general suppliers know about them in advance:
“If our people visit the factory and see 10 little kids sitting at the table, then of course they will think something is wrong at the supplier’ site. But in general, this will never be the case, because they (suppliers) know in advance that the we come to visit them and, which may create the possibility for suppliers to hide the things that are not allowed according to the buyers” (Retailer C, CSR manager).
Approaches for managing sub-suppliers
Retailer C’s CSR manager states that they intend to manage the sub-suppliers’ social sustainability indirectly through their first-tier supplier. Currently Retailer C only stimulates the first-tier supplier to take into account their sub-suppliers’ working conditions. However, Retailer C does not monitor its first-tier suppliers’ on their sourcing activities. According to the Retailer C’s CSR manager, the BSCI membership may facilitate the retailer to increase the first-tiers involvement:
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However, Retailer C is not able to actively manage the sub-suppliers’ social sustainability. The focus remains on the first-tier suppliers and they have no information about their sub-suppliers. Similar to the case of Retailer A, Retailer C’s relatively low buying demand causes a lack of buying power over its tier suppliers, which makes it unable to pressure the first-tier suppliers to disclose their supply base. Retailer C’s quotes are displayed in the illustration of coded data in Appendix B. According to Retailer C, working together with its competitors in the BSCI increases the power over the first-tier suppliers and enables to put pressure to respond to the retailers’ requirements. According to Retailer C, the first-tier suppliers’ risk of losing all the retailers’ purchasing demand if they do not comply with the retailers’ requirements creates this power.
Furthermore, Retailer C’s relative low capacity causes a lack of information transparency between Retailer C and its sub-suppliers and forms an obstacle for the indirect management of sub-suppliers’ social sustainability. Retailer C’s CSR manager states that they lack the knowledge how to involve the first-tier supplier in the management of sub-suppliers and they lack the available people to manage the sustainability in the whole supply chain. However, NGOs can substitute for this lack of knowledge and resources.
“In the aim to manage sub-suppliers’ social sustainability indirectly, we encounter the lack of knowledge we have as retailers. Therefore, we have to work together with NGO, who do have this knowledge and the local people.” (Retailer C, CSR manager)
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sustainability in the supply chain. Retailer C’s quotes are displayed in the illustration of coded data in Appendix B.
Cross-case analysis
In cross-case analysis cases are compared, which helps to note some differences and similarities (Barratt, Choi, & Li, 2011).
Retailers’ management of first-tier suppliers’ sustainability
Retailer A, B and C all recognized that they cannot manage their suppliers on their own and therefore they all became member of BSCI, to work together with other retailers and brands from different industries to jointly improve the working conditions in the global supply chains (Retailer A,B,C’s website). BSCI requires its members to follow the BSCI approach, which means that the management of suppliers’ social sustainability both involves the monitoring of supplier compliance with the BSCI Code of Conduct and supplier collaboration by giving them support in the improvement of the working conditions in their factories. Next to the adoption of the BSCI Code of Conduct, both Retailer A and B also developed their own Code of Conduct to show their stakeholders that they require their suppliers to adopt certain social standards. Retailer C did not developed its own code of conduct and adopted the BSCI code. The studied retailers make use of BSCI provided audit tools and training tools as well as BSCI recommended independent audit companies’ services. However, Retailer B also provides training to its first-tier suppliers themselves, which makes them more involved in supplier development than Retailer A and C.
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willing to manage the social sustainability at sub-suppliers, they all point to the difficulties they face in achieving this. All three cases are intended to manage the sub-suppliers indirectly via the first-tier supplier, but this is not feasible for them yet due to several contingencies that form an obstacle.
Low information transparency due to complex supply chain structures
According to all three retailers the complexity and fragmentation of their supply chain forms an obstacle in gaining more information transparency between the retailers and their suppliers in the whole supply chain. They point to all kinds of traders, brokers and wholesalers that are involved in a supply chain that already has many tiers between the cotton farmer and the fashion retailer. According to the Dutch NGO SOMO (2016), the fashion supply chain is extremely complex and fragmented, because clothing has to go through many stages and processed by different actors before it is put on store shelves. According to the retailers, this complexity increases even more when the agencies and other intermediaries are included. Because retailers may make use of independent agents and other intermediaries to source their end products, retailers lower their own knowledge of the actual supply chain (SOMO Factsheet, 2015). Both Retailer A and C point to these intermediaries, that make it difficult for them to gain full information transparency between the retailers and their first-tier suppliers. Although both retailers have an overview of their first-tier suppliers, they have not identified all first-tier suppliers completely. Retailer B does have a complete overview of its first-tier suppliers, partly because they source from the first-tier supplier directly. The studied cases demonstrate that there is a difference regarding information transparency between retailer and first-tier supplier, which is related to the main sourcing route.
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2015). This means that the contractual production factory may shift even complete orders to unknown suppliers (SOMO Fact Sheet, 2015), which also include home-based workshops, stitching centers and small workplaces (SOMO Fact Sheet, 2014). Because the subcontracted production factories are not formally part of the retailer’s supply chain, the buyer’s audits on social compliance are not conducted there (SOMO Fact Sheet, 2015). Together with the often temporary and volatile supplier contracts and the lack of legal protection this means that these employees are subject to labour rights violations (SOMO Fact Sheet, 2014).
Unwillingness of (first-tier) suppliers to disclose their own suppliers
All three studied cases adopted the BSCI Code of Conduct, which requires all members’ suppliers to reveal their suppliers (BSCI Code of Conduct, 2014). However, all three retailers stated that their first-tier suppliers are often unwilling to disclose their suppliers (i.e. the retailers’ sub-suppliers). The willingness of the first-tier suppliers to disclose sub-suppliers information is a prerequisite for the retailers to increase the information transparency between the retailer and its sub-suppliers and to increase first-tier supplier involvement in the management of sub-suppliers’ social sustainability. According to the three retailers, this first-tier suppliers’ reluctance to reveal information about their suppliers is caused by their fear that the retailer will by-pass the supplier and will lose its business relationship. Both Retailer A and B mention the long-term buyer-supplier relationship and creation of trust as a way to encourage first-tier supplier to be more open about their sourcing partners and to reduce the supplier’s fear for being by-passed. According to SOMO (2015), long-term buyer-supplier relationships signal the buyers’ willingness to invest in the production factory and to purchase from them next season. In turn, these first-tier suppliers will be expected to be more open about which supplier they contract (SOMO Fact Sheet, 2015).
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Buying power over first-tier supplier
All three retailers pointed to their dependence on their first-tier supplier’s willingness to reveal information about their supply base and lack of direct influence over their sub-suppliers. The studied cases demonstrated that the retailers were only able to pressure their first-tier suppliers to disclose sub-supplier information and involve the first-tier supplier in the management of social sustainability, if the retailers have sufficient power over their first-tier supplier. All three retailers are aware of their lack of buying power over their first-tier suppliers, but relate this shortcoming to different sources. The lack of buying power over the first-tier supplier is according to both Retailer A and C related to their relative small purchasing volume. Both retailers stated that first-tier suppliers are less likely to respond to the retailer’s requests, for disclosure of sub-suppliers as well as for first-tier supplier involvement, because the retailer’s relative small purchasing volume makes the first-tier suppliers not feel dependent on the retailer for revenue. However, Retailer B does not attribute the lack of buying power to the small purchasing volume, because their first-tier suppliers are considered dependent on their orders too. According to Retailer B, the first-tier suppliers have more power than the retailer because they possess information about sub-suppliers the retailer is dependent on.
Criticality of the retailers’ resources for managing sustainability
Both Retailer A and C pointed to the unavailability of resources, in terms of capacity and knowledge, as an obstacle in the management of sub-suppliers’ social sustainability. According to both cases, the lack of information transparency between the retailers and sub-suppliers is related to the unavailability of the retailers’ own resources. According to Retailer C their lack of knowledge and capacity also impedes the aim to involve the first-tier supplier in the management of sub-suppliers’ social sustainability. However, local knowledge and resources from third parties, like BSCI, independent audit companies and NGOs, may substitute for the retailers’ lack of knowledge and support the management of sub-suppliers. Although Retailer B did not mention their unavailability of resources, they do acknowledge the dependency on third parties in their aim to identify and manage the sub-suppliers social sustainability.
Suppliers’ non-compliance and/or mock-compliance with the code of conduct
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demonstrate that it is difficult for the retailer to achieve suppliers’ compliance with the code of conduct, because some suppliers’ employees demand to work overtime because they simply value the extra payment. Furthermore, Retailer B points to the difficulty to require Chinese factory workers to have a social insurance. The Chinese social insurance law poses difficulties when it comes to the implementation of social insurance for migrant workers in the apparel industry (Clean Clothes Campaign, 2015). Retailer A did not mention this obstacle. According to Retailer C, suppliers covering up non-compliance during social compliance audits make it difficult to detect social violations. Although both Retailer A and B, did not mention this obstacle in addressing the social issues and managing the social sustainability in the supply chain, NGOs do. Because child labour is prohibited, suppliers will always do everything they can to hide such practices (SOMO Fact Sheet, 2014) and therefore the buyer-driven compliance audits and factory visits fail to detect prohibited practices both in the formal and informal supplier factories (SOMO Fact sheet, 2014).
Cultural and geographic distance
The cultural distance is an obstacle for the three retailers in the management of social sustainability in the whole supply chain. Retailer B and C both explain that the difference in norms, values, habits and regulations between Western buyers and Asian suppliers and suppliers’ employees form difficulties for buyers to implement the BSCI Code of Conduct. Both cases demonstrate that the misalignment between the BSCI Codes of Conduct and the local Asian culture is an obstacle for the management of social sustainability in the supply chain. Retailer A points to the communication difficulties, related to the difference in norms, values and mentalities between buyer and suppliers. Lastly, Retailer A and C see geographical distance as an obstacle for transparency in the supply chain and makes it difficult to manage social sustainability from the Dutch headquarters. An overview of the different contingencies per case is provided in Appendix D.
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demonstrated by the cases, working with competitors, BSCI and NGOs may help to overcome these obstacles. For the retailers, working together with others partners makes it the possible to the indirectly manage the sub-suppliers’ social sustainability in the future. The key findings of the case study are presented in figure 3.
Figure 3: the revisited framework
Discussion
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the sub-suppliers through their first-tier suppliers, the cases demonstrated that working with BSCI and competitors is essential.
The case study confirmed that the Tachizawa and Wong’s (2014) suggested approaches to manage the sub-suppliers’ sustainability are also considerable approaches for the studied retailers: they consider to manage the sub-suppliers directly, indirectly through first-tier supplier involvement, work with third parties or they may not manage them at all. It also confirmed that similar contingencies exist that act as antecedents for a certain buyer approaches. Although these contingencies are rather generally formulated, Tachizwa & Wong (2014) also suggested power, geographical distance, cultural distance, and availability of resources as important contingencies that may act as an antecedent for a e’s approach to manage sub-suppliers’ sustainability. However, what these authors did not take into account is the possibility that these contingencies may also have an influence on each other. For example, as has been demonstrated by the studied cases the buying power over first-tier suppliers may influence the willingness of the first-tier supplier to disclose its supply base. Also, Retailer B and C demonstrated that cultural distance might influence the suppliers’ non-compliance and/or the employees’ non-non-compliance when the code of conduct requirements conflicts the norms and values of the local culture. Lastly, the geographical distance may influence the complexity of the supply chain. For example, McCarthy & Jayarathne (2012) refers to the complexity of the apparel supply chain in terms of the geographical distance between the buyer and its suppliers in the supply chain. Thirdly, it is confirmed that the four approaches suggested by Tachizawa & Wong (2014) are indeed complementary to each other, because the approaches can be used simultaneously in managing sub-suppliers’ social sustainability. As has been demonstrated by the studied cases, the management of sub-suppliers’ social sustainability intends to be achieved by using two approaches: the work with third parties approach and the indirect approach.
